## Asia’s Prospects for A Soft Landing Have Improved

_IMF News, January 31, 2024_

## Source details

**Canonical URL:** [Asia’s Prospects for A Soft Landing Have Improved](https://www.imf.org/en/news/articles/2024/01/30/013124-apdreo-presser-opening-remarks)

## Other formats

- [Markdown version](/en/news/articles/2024/01/30/013124-apdreo-presser-opening-remarks/index.md)
- [Structured JSON version](/en/news/articles/2024/01/30/013124-apdreo-presser-opening-remarks/index.json)
- [Bundle manifest](/en/news/articles/2024/01/30/013124-apdreo-presser-opening-remarks/bundle-manifest.json)

## Bibliographic details
- Published: January 31, 2024

---

### Global developments
- Global growth projections:
  - 3.1 percent growth for 2024—the same growth rate as in 2023.
  - 3.2 percent projected for 2025.
  - Historical (2000-2019) average for global growth: 3.8 percent.
- Global inflation projections:
  - 6.8 percent in 2023.
  - 5.8 percent in 2024.
  - 4.4 percent in 2025.
- Drivers supporting 2023 activity:
  - Stronger private and government spending despite tight monetary conditions.
  - Supply-side supports: higher labor force participation, unwinding of supply chain bottlenecks, and lower energy prices.
- Note: Current projections are somewhat better than the October 2023 World Economic Outlook but remain below the 2000-2019 average.

### Asia—growth outlook and recent revisions
- Regional growth estimates and revisions:
  - 2023 estimated growth: 4.7 percent (up from 4.6 percent projection in October).
  - 2024 upgraded regional growth forecast: 4.5 percent (from 4.2 percent in October).
  - 2025 projected regional growth: 4.3 percent, reflecting largely China’s slowdown.
- Contributors to upward revisions:
  - China and India account for most of the upward revision for 2023.
  - China: higher spending on disaster reconstruction and resilience projects.
  - India: strong domestic demand underpinning increased growth estimate.
  - More supportive external environment, notably robust growth in the United States.
  - Pick-up in demand for technology—computers, electronics, and optical products—benefiting Korea and Singapore.
  - Sizeable policy stimulus announced by countries like China and Thailand.
- Asia’s share of global growth:
  - Asia is on-track to deliver again two-thirds to global growth in 2024, as it did in 2023.

### Country divergences (selected)
- Japan:
  - Growth expected to slow from about 2 percent in 2023 to about 1 percent in 2024.
  - One-off factors in 2023 that fade: a depreciated yen, strong tourism, and a recovery in business investment.
- India:
  - Growth expected to remain strong at 6.5 percent in both 2024 and 2025.
- China:
  - Growth slowdown is a major factor in the regional deceleration projected for 2025.

### Inflation, monetary policy, and exchange rates in Asia
- Regional inflation trends:
  - Average Asian inflation fell from 3.8 percent in 2022 to 2.6 percent in 2023.
  - Many regional central banks are on course to reach their inflation targets in 2024.
  - Scope for monetary easing may emerge later in the year if policymakers hold steady until inflation is firmly re-anchored.
- Country-specific inflation notes:
  - China: inflation was 0.3 percent in 2023, raising deflation concerns; weakness mainly from lower food and energy prices and subdued core inflation. Inflation is expected to recover gradually through 2025.
  - Japan: inflation 3.2 percent in 2023; expected to slow but remain above the 2 percent inflation target until 2025.
- Interest rate and exchange rate dynamics:
  - In the second half of 2023, the U.S. Federal Funds rate exceeded the average policy rate in Emerging Asia, triggering depreciation pressures on Asian currencies in the fall of 2023.
  - Those pressures have abated as the Federal Reserve signaled interest rate cuts going forward.
  - Risk remains that divergent monetary stances between the United States and Asia could trigger sharp exchange rate movements; central banks should focus on price stability and avoid being distracted by temporary turbulence.

### Key risks and scenarios
- Downside risks:
  - A larger and more drawn-out correction in China’s property sector could curtail domestic demand, especially if accompanied by stress in local government finances, and would reduce demand for the region’s exporters.
  - Tighter-than-expected financial conditions in the United States or Asia could put pressure on heavily indebted industries and economies.
  - Rising risks of geopolitical fragmentation that increase the costs and inefficiencies of supply chains and raise shipping costs.
- Upside scenario:
  - Stronger-than-expected policy support in China could boost domestic demand and generate positive spillovers for the region.

### Policy priorities for Asia
- Fiscal policy:
  - Fiscal consolidation is key to restoring buffers and safeguarding debt sustainability.
  - 2023 budgetary balances improved somewhat in Asia, but consolidation was slower than anticipated—additional belt-tightening will be needed.
- Financial sector:
  - Strong financial supervision and systemic risk monitoring to safeguard against potential financial sector vulnerabilities.
- Structural policies:
  - Structural reforms to boost productivity and mitigate challenges from global de-risking.
  - Accelerate the green transition as essential for sustainable growth.

### IMF cooperation with Japan
- Areas of cooperation:
  - Close work through the IMF’s regional office in Tokyo.
  - Acknowledgement of Japan’s support for IMF initiatives.
- Examples of Japan’s contributions (high-level):
  - Support for meeting IMF’s fundraising targets for the Poverty Reduction and Growth Trust (PRGT) through loan resources and a subsidy contribution.
  - Contributions in 2022-23 to the Resilience and Sustainability Trust (RST).
  - Raised pledge regarding SDR channeling, strengthening IMF’s ability to support low-income and vulnerable member countries.
- Japan’s role:
  - An important thought leader in discussions of SDR channeling and a crucial and reliable partner of the Fund in its support for low-income countries.

_Remarks by Krishna Srinivasan, Director of the IMF’s Asia and Pacific Department, Press Conference on the Regional Economic Outlook, Tokyo, January 31, 2024._

---


## References

- [Transcript of the Press Briefing, Tokyo, January 31, 2024](https://www.imf.org/en/news/articles/2024/01/31/tr013124-press-briefing-regional-economic-outlook-asia-pacific-department)
- [Press Briefing by Krishna Srinivasan, Director of the IMF’s Asia and Pacific Department on the Latest Economic Outlook for the Region, Tokyo, January 31, 2024](https://www.imf.org/en/videos/view/6345962126112)
- [People's Republic of China and the IMF](http://www.imf.org/external/country/CHN/index.htm)
- [India and the IMF](http://www.imf.org/external/country/IND/index.htm)
- [Japan and the IMF](http://www.imf.org/external/country/JPN/index.htm)
- [United States and the IMF](http://www.imf.org/external/country/USA/index.htm)
- [Speeches](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2024/01/30/013124-apdreo-presser-opening-remarks_